Virtus sues FDA, says agency move will lead to potassium chloride price hikes

Justice statue with sword and scales

Generic drugmaker Virtus Pharmaceuticals recently asked the FDA in a Citizens Petition to hold up on its plan to remove unapproved generic versions of potassium chloride from the market. Now it has filed a lawsuit demanding the FDA put on the brakes.

Virtus filed the lawsuit today in the Middle District of Florida alleging that if the FDA follows through, it will hand a monopoly on the generic drug to a couple of companies. The action, it says, is sure to lead to much higher prices. That on a treatment that has been sold for nearly 70 years and grandfathered in as a safe generic.

“We have tried every option to engage with the FDA to understand their legal and regulatory basis for clearing the potassium chloride market of competition, but unfortunately our questions remain unanswered,” Virtus CEO Tina Guilder said in a statement. “We believe that the FDA’s creation of an effective monopoly in the potassium chloride market could lead to severe consequences for patients who depend on this drug and to substantial price hikes, and we are taking legal action to restore a fair and competitive marketplace for potassium chloride products.”

The suit asks for a declaratory judgment that FDA may not take enforcement action against Virtus’ product without a formal and specific determination that the product is either unsafe or ineffective. It asks the court to make the FDA set aside a rule that says the agency can ask drugmakers to leave the marketplace with grandfathered drugs when a drugmaker goes to the trouble of getting one of these drugs approved.

The FDA in late 2014 approved Lehigh Valley Technologies’ generic of potassium chloride , a drug used by millions of people to treat hypokalemia, a deficiency of potassium in the bloodstream. For decades there have been many versions of the drug on the market that predated the requirement for clinical trials but were deemed safe by the FDA to be sold.

In a citizen petition, filed in July, Tampa, FL-based Virtus accused Lehigh of misleading the FDA in winning approved generic status for a couple of versions of oral potassium chloride. It alleges Lehigh avoided paying more than $2 million in user fees by using front companies to get small business status then "apparently sold these rights to Endo Global Ventures for $47.7 million."

Endo last week declined to comment on litigation and Allentown, PA-based Lehigh did not respond to a request for comment.

In its Citizen Petition, Virtus appealed to the public concern over steeply rising prices for older generics saying prices were sure to rise if there is just one approved generic on the market.

According to info from First Data Bank, Endo has more than doubled the price of the drug since getting control of it, to $236.93 in June of this year from $121.50 in May 2015. Endo this year lowered its earnings expectations and is laying off employees to cut costs, but according to a Morgan Stanley analyst report, it has told investors it expects big upside from liquid potassium chloride sales as makers of unapproved versions of the drug heed the FDA request to exit the market now that there is an approved generic.

A similar situation unfolded with neostigmine, used to reverse neuromuscular blocking agents following surgery, which jumped in price after the FDA removed unapproved generics from the market.

The lawsuit was filed even as lawmakers have been complaining about rising prices and the DOJ has been subpoenaing companies to provide information on drug pricing and possible collusion. Last month, Taro ($TARO) issued a SEC filing saying that the company and two senior execs on the commercial side had received subpoenas from the Justice Department “seeking documents relating to corporate and employee records, generic pharmaceutical products and pricing, communications with competitors and others regarding the sale of generic pharmaceutical products,” and other matters. It is one of many that have now been contacted by the feds to provide information.

- here’s the Virtus release
- access the Citizen Petition here

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